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PC Fortnite Pokemon. Movies TV Comics. Marvel Game of Thrones. Fortnite Destiny 2 Resident Evil 2. God of War Persona 5 Breath of the Wild. Section 13 essentially makes every major aspect of the contract amendable if any other label has a better deal or interpretation of that aspect than Sony Music.
Sony Music can call on an independent auditor once a year to determine whether Spotify has struck a more agreeable deal with any other labels. Having an MFN clause in a contract is standard for music licensing contracts, according to multiple sources.
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But they remain legal in the US. One of the murkiest clauses in the contract is hidden under the contractual definition of gross revenues in section 1 vi bb. The clause states that gross revenue includes "actual out-of-pocket costs paid to unaffiliated third parties for ad sales commissions subject to a maximum overall deduction of 15 percent "off the top" of such advertising revenues.
Spotify may also use these funds to recoup the commissions it has to pay to the third-party companies it uses to sell its ads.
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The company has gone to great pains to map out for the public exactly what it pays, in part as a public relations move to try and counter criticisms about what it pays artists. But in that detailed explanation, it never mentions this 15 percent. In addition to the advance Spotify must pay Sony Music, it is also required to give the music label free ad space on its service. Sony Music could in effect sell the free ads it has been given for millions, and turn around to buy more ads at a reduced price. But there is another far more complex formula that can earn Sony Music even more money from Spotify.
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